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Home >Money >Personal Finance >Tax returns filing this year: What has changed

Every year, there are certain changes that are incorporated in the forms issued for filing income tax returns (ITR) and the processes involved, which the taxpayer should know about. This year, too, certain revisions have been made to the forms and processes involved. Here are some of the changes you should know about when you file your tax returns.

Change in tax forms: ITR-1, also known as the SAHAJ form, is one of the most commonly used tax forms. It can be filled by a resident individual whose total income from salary or pension is not more than 50 lakh, has one house property and agriculture income of up to 5,000.

If a person is the director of a company, or holds investments in unlisted equity shares, he/she is not eligible to file returns using the ITR-1 form.

However, this year, the eligibility criteria for this form has been revised. Section 194N of the Income Tax Act requires banks, post offices and co-operative banks to deduct TDS (tax deducted at source) of non-filers of ITR. As per the newly notified forms, such taxpayers will not be able to file returns using ITR-1.

This year, you will also have to mention in the tax forms whether you are opting for a new tax regime or the old one.

Further, you will have to declare dividend income from shares and equity instruments this year under the head ‘income from other sources’, as now the dividend income is taxable. Earlier, dividend income was shown under the head ‘exempt income’.

In Finance Act, 2020, employees receiving ESOPs (employee stock option plans) from eligible startups were allowed to defer taxes.

TDS on the perquisite stands deferred to earlier of the following events, expiry of five years from the year of allotment of ESOPs, date of sale of the ESOPs by the employee, or date of termination of employment. Such employees will not be able to file ITR-1; they will instead have to file ITR-2. The respective ITRs have been amended accordingly.

Pre-filled information: The tax department will be providing certain income pre-filled to taxpayers from this year. “Taxpayers are asked to confirm the details in each section. These details are pre-filled from various sources, but it is advisable to recheck them with the actual information. If there is any mismatch, the taxpayer shall edit the pre-filled details," said Tarun Kumar, a New Delhi-based chartered accountant.

JSON facility: Until last year, the return could be filed through the taxpayer login or using the Excel and Java utilities available for e-filing. “This year, the department has done away with the Java or Excel utility and launched the JSON (JavaScript Object Notation) utility for e-filing. There is a common offline utility for filing ITR-1, ITR-2, ITR-3 and ITR-4 for assessment year 2021-22. Although the return can be filed through the JSON utility, it is advisable to use the e-filing platform as it is the easiest way to file returns," said Kumar.

Extension of deadline, but no relief from penal interest: The extension of deadline doesn’t provide any relief from penal interest that a taxpayer has to pay in case there is an outstanding tax liability either under self-assessment tax or advance tax. Interest under Section 234A is levied if the ITR filing is delayed.

Say the deadline for filing ITR is 31 July, and a person files ITR on 5 August, interest will be levied at the rate of 1% per month on the tax due. However, like last year, the government has provided relief under Section 234A to taxpayers whose self-assessment tax is up to 1 lakh.

Penal interest is levied upon delay in filing ITR under Sections 234B and 234C. Under Section 234B, one is required to pay interest at the rate of 1% if the taxpayer has not paid advance tax or has paid less than 90% of the tax liability. Under Section 234C, interest is levied in case the advance tax paid is less than the prescribed instalments.

If there is a shortfall in advance tax payment, interest at the rate of 3% is charged for that particular quarter.

Therefore, it is better for taxpayers to file their ITR and pay due tax in time to avoid interest penalties.

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